2003•RePEc: Research Papers in EconomicsRequires access

Vertical integration, exclusive dealing and product line differentiation in retailing

Éric Avenel, Stéphane Caprice

Abstract

We analyze vertical integration and exclusive dealing in a model of vertical differentiation in which retailers compete in product lines. Depending on quality and cost differentials, the equilibrium is characterized either by integration and partial product lines differentiation or by exclusive dealing and complete product lines differentiation. The model leads us to recommendations for antitrust policy makers: exclusive dealing should be banned per se, while a rule of reason approach

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Key concepts: Product differentiation, Vertical integration, Product line, Product (mathematics), Quality (philosophy), Line (geometry), Business, Industrial organization